re: change of topic
ok then Gerry... an old post from BlueGriffen for those that are new. DYOR
Post a new topic in this forum Reply to this message ignore user
Subject an opinion ... Posted 22/02/05 17:58 - 699 reads Posted by Blue Griffin IP 144.136.xxx.xxx Post #520666 - start of thread - splitview
Respectful greetings to NDO share-holders & all other interested fellow members ... : )
I thought that I would start the ball rolling on a speculative thread specifically intended for research & opinions/conclusions drawn from different perspectives, (whether bearish or bullish), simply for quick reference for fellow members & assistance with greater market awareness for the potential growth variables relating to NDO without unnecessary emotional dilution taking from the qualitiative content derived from individuals' time-spent research & experience ... For those that see no justification for the current market capitalisation or fail to see the potential upside or are simply sitting on the sidelines, then I hope this opinion/thread assists in clearing up any confusions, doubts or ambiguities, one way or another.
Individuals' personal investment strategies differ due to many variables & for me personally, I have chosen NDO as the greatest percentage weighting in my portfolio for aggressive wealth creation over the next eighteen months. Below is a touch of the why ...
Golden rule #1 is management ...
Good management, (generically applicable but directly related to junior speculative hopefulls), won't hang around in a company with poor assets, & conversely, a company with great assets but poor management will leave you as a shareholder languishing whilst those involved in & close to the company receive the physical gains time & time again. They use carrots to entice & asset dilution to sustain their quality of life. They fail to deliver, identify, rationalise & develop existing assets in optimum time-frames & valid opportunities for further asset-base increases are neglected, replaced by 'mates-deals' in which they have direct or indirect interests in or 'snowball' benefit from. We can go on & on, the market's full of them ... But there's no point getting angry or emotional about it, the market is what the market is ... understand them, for they are an integral part, of it ... identify them, accept them, trade them, learn from them, profit from them, or simply stay well away from them ... but never trust them, never go to bed with them, & never ever take your eyes off them & their related entities if you have live exposure. They have one priority & it will always be themselves without ever truly understanding responsibility, obligation, accountability, duty, trust, loyalty, integrity & honour of self. Simply part of the human condition; if they can, they will ...
Alternatively, if you find good management amongst the sea of debris & hype ... management that actually deliver respect to share-holders by setting a stringent, visible, accountable structure in place & adhering to that same structure within the given time-frames with solid delivery of progressive action ... then follow them, do exhaustive research on the asset base of the company, then, do some more research, & if you still like what you see, then invest & trust them - let them do what they do best, be patient, over-see & re-evaluate & let the chips fall where they may ... This does not give the guarantee but it eliminates the probability risks associated with mismanagement; incompetence, ignorance & negligence.
Mr. David Whitby & his team, though still very early days, have demonstrated to me that they deservedly can be categorised in the highest level of management capability for a listed company, & I choose to trust that they will sustain that same level of transparancy, competence, confidence & commitment over the period of time necessary to develop NDO's existing assets.
I know, I know ... emotional attachment reeking through this already! (tut-tut ... tsk-tsk!) : )
I have always thoroughly believed, that to achieve any task, no matter that task ... whether getting a cat out of a tree, changing a light bulb, teaching children or adults, putting out a fire - (RECEO), dealing with varying personalities in extreme circumstances or steering an entity/company through a complicated development process, anything! ... the only structure necessary is contained in the mantra; Prioritise. Utilise. Improvise. Optimise. Realise.
& then this Whitby fellow walks in and !! ... : )
Now the above pretty much states my own, & I believe echoes many other traders/investors perception of NDO management in an unequivocal proverbial nutshell!
The market will generally, more often than not, overshoot a respected management team or apply the upper parameter sector price earning ratios vs risk, potential, location & sustainability (reserves), to decide the market capitilisation. The collective market decides & in that market ... he who has more, has more influence! ... ie - the institutions & their analysts have a greater deciding impact than the likes of you or me. To move on ...
Golden rule #2 are the assets ...
In summary, I have simply categorised the Nido asset-base into primary & secondary. The primary assets are the Galoc field & Pagasa Turbadites. My investment time-frame is twelve to eighteen months to see the field certification, Phillipine DOE approval, joint venture funding, forward time-line structure presentation, development of & successful production from two horizontal development wells in the Galoc field. Within that same time frame relating to the Pagasa Turbadites; geological modelling & 3D seismic interpretation, identification of 'elephant' targets, multinational major attracted to commence minimum two to four well exploration program with a forward time structure then presented to the market.
Current & potential North Sea permits/prospects are purely secondary assets, anything successfully developed over that twelve to eighteen month period is a bonus relating to fundamental growth, market interest/speculative value & risk diversification. That is not to dismiss the future potential or current value of these assets, simply that in my time-frame they are not the primary reason for my investment.
I understand that an ultimate achievement for NDO in that time-frame relating to the North Sea, would be by second quarter next year, (Q206), further acerages awarded/granted/purchased to then be negotiated/farmed-down/traded for carrying of costs & access to further joint ventures & acerage to achieve a standard 20% interest across the board in eight to twelve permits. That is including the completion of two appraisal wells on the current permits, (48/1a, 48/2b), & a forward drilling time structure for permit 47/9c (including further acquisitions) released to the market after geological/technical interpretation, mapping & modelling, J.V. agreements & funding arrangements has taken place. Looking at the schematics released of the current permits clearly shows nearby pipeline infrastructure which would then facilitate immediate access to markets if commercial quantities/flows of gas are discovered creating revenue/earnings to cover exploration & administration expenditure in that region compounding future growth. An AIM listing would assist with the reflection of true economic value of any success in that region because of the backyard nature whereas being just listed domestically the market may otherwise leave a discount to peer value.
So, for a secondary asset, an investor cannot dismiss the potential in this region with this management team in play & that ... would be all bonus! : )
The recent 'Cool Energy' investment was another significant step foward in asset diversification that may lead to, whether directly or indirectly, farm-in/development opportunities to borderline economic fields in exchange for access to this technology if success continues in larger model/volume tests. I will admit that I have a great deal more to learn about this technology & it's applications. It has become for me, a simple extension of trust to the management that they as competent industry specialists have decided on it's potential benefits to the company so I'll just let them get on with their jobs & see what eventuates. As an investor, I have preference for & will support well managed ventures involving the utilisation of existing funds or debt facilities for future wealth creation rather than laying about idly. Those same funds were of an inadequate value for the Galoc development & future administration/technical costs will be covered by the balance and the optimisations referred to below, so I received this left-field development as a prudent step forward with the potential to create greater asset value and/or present significant opportunities to the company in the future.
The other secondary assets are the producing Nido & Matinloc fields which are the current backbone of the company, which after the Q404 report, has allowed investor security to come into play evident by the recent price/volume increase by full service broker & institutional interest, (Patersons, Macquarie, Euroz, Southern Cross, Hudsons, etc), with little day trader activity. In the quarterly we saw that revenue/earnings generation/increases covering (86%) administration & technical costs was an irrefutable statement to the market that NDO management 'can-do'.
In one quarter, we have seen production from these fields increase by more than 117%, (from 32,664bbls to 70,982bbls), with oil receipts totalling AUD$325,000. A forward monthly production target increase to 58,000bbls per month, which is 174,000bbls per quarter reflecting a further production increase of 145% from now, or compared to Q304 production, is a total increase of greater than 430% production optimisation. In anyone's language, that will be a remarkable achievement.
For general base speculative calculations of earnings, I will assume the combined average NDO interest for both fields which is Nido - 22.486%, Matinloc - 28.283% equalling 50.769% divided by 2 equals 25.3845% average interest.
Q404 production total was 70,982bbls multiplied by 0.253845 equals 18,018.425bbls net production for NDO receiving AUD$325,000 in oil receipts equates to net AUD$18.037 per barrel of oil produced, (bop). Round this figure down to net AUD$18.- per bop for the next 2 quarters and if target production of 174,000 in Q205 is achieved, then net production to NDO, (174,000bbls multiplied by 0.253845), equals 44,169.03bbls, (divided by 91 equals 485.37 barrels of oil produced per day, {bopd},), multiplied by AUD$18.- equals oil receipts for Q205 totalling AUD$795,042.54.
Industry price to earning ratios differ due to many variables as stated above, but generally for a junior producer in this sector, the market applies p/e of eight times, and in upper case applications, the p/e is ten times. For a major producer, the general p/e application can be twelve times, whilst upper p/e may be up to fifteen times.
For long term calculations, apply an annualised compound field production decrease of fifteen percent, but that may be compensated by the statement in the Q404 report, (page 2, value optimisation header, paragraph 4); 'Proposals from two companies were received by the Joint Venture to further optimize Nido and Matinloc and to re-establish production of several suspended oil fields within the SC14 area. Both of these proposals are under consideration by the JV. Nido is pleased about these proposals as they provide third party confirmation of the upside potential of SC14 permit that Nido has identified.'
Whatever occurrs, within my investment time-frame, as a minimum, I have every confidence that all technical & administration expenditure incurred by NDO will in total be covered by the Nido & Matinloc assets leaving any bopd from the Galoc field left for the market to apply raw upper case p/e applications. : )
Relating to the Pagasa Turbadites & the West Palawan basin as a whole, one cannot over-state the exploration potential & the serious possibility of a major wanting access to this region. Allow no illusions though, this will take some time for geological modelling & 3D seismic interpretation, the identification of those 'elephant' targets & the courting of a major to fund and plan a drilling agenda, but the ball has started rolling.
I have pasted below an excerpt from this link which is interesting reading in it's entirety for those interested, . 'Resource Assessment The Philippine Petroleum Resource Assessment Project developed a petroleum resource classification system and established an inventory of Philippine petroleum resources. The results showed that the country’s total risked petroleum resources is about nine billion barrels fuel oil equivalent (bfoe). More than half of these or about five billion bfoe is estimated to occur in the offshore West Palawan and Sulu Sea regions.'
The NDO J.V. permit(s) hold a potential two billion bfoe. It is an 'elephants playground'. Draw your own conclusions on the weight of market speculation in response to a major coming into the play with that, & that is why I have categorised the exploration potential of these assets as a primary. : )
The Galoc field ...
Most members should now be well aware of the current status of the Galoc field & if not, then going through releases from the last six months should bring one up to speed fairly promptly & because of that, I will focus more on reward tables that can give an indication of the future market capitalisation based on a few primary variables. In summary, the Galoc field, was discovered in 1981 and during extended well tests in 1988, Galoc-1 flowed at a sustained rate of 4,400bbls per day with a total of 380,000bbls of oil produced from the field before operations were suspended. Galoc-1 was drilled as a vertical well with a water-based mud system, the introduction of water to the reservoir resulted in severe formation damage which reduced production rates leading to the suspension of the field. The size of the field is estimated to be between 100-150mmbbls with industry concensus guaging a recoverability of > 35% being achievable.
Therefore; *100mmbbls multiplied by 0.35 (percentage of field recoverable) multiplied by 0.22279 (NDO ownership of field) equals 7,797,650bbls of oil net to NDO. *150mmbbls X 0.35 X 0.22279 = 11,696,475 bbls of oil net to NDO. But, rather than jumping the gun ahead of reserve certification & incompetently entering into the complex foray of calculating the value of P1, P2, P3 & P50 reserves, (proven, proven & probable, probable, 50% probable), factoring in geographical location, soveriegn risk, time to production discounts, etc, to then arrive at a raw net present value for this asset ... I will base my speculative calculations on assumptions of total J.V. bopd by the end of Q106, multiplied by NDO field percentage ownership to determine NDO's bopd, then apply three different AUD$ net value per bop & then assume four different price earning ratio applications to then arrive at variable market capitilisation values. : )
For validity of upper reward table bopd conclusions, constructive input, either opinions or links, from forum members that have specialist industry expertise/understandings, (ie- Haasko, Ian W., Geos, Towie, etc), for further detail on key industry technological advances over the last 17-24 years would be welcome/appreciated on any of the following but not limited to; horizontal drilling techniques substantially increasing the meterage interception from hydrocarbon producing structures; drill bit technologies & optmimal rotational speeds vs type of geology relating to optimal sidewall formation/structure preservation; geological, geophysical & petrophysical understandings; 3D seismic time & depth conversion interpretations.
To be noted also is the conclusion from third party, independant consultants that the Galoc-1 well was drilled on the edge of the structure & that a greater production realisation could occur in a future development program.
NDO management as well as a couple senior industy analysts, believe that due to the above factors, combined field production from two horizontal development wells utilising state of the art technologies, understandings & practices may lead to an initial daily J.V. production total from the Galoc field of up to 25,000bls of oil per day.
With the Galoc field, everything obviously hinges on whether the J.V. can obtain funding for this development, (aknowledged at approx. US$40m), but access to global risked capital in today's world come in many forms, & if it can be done in relation to this asset, then I believe that this management team will. Upon the event that successful funding occurs & those funds become available to the J.V., it could be as little as four to six months from that date in which drill rig mobilisation & field development begins.
For an understanding of potential net AUD$ value per bop, we have the (above) Nido/Matinloc optimisation value of AUD$18 per barrel. To also aknowledge is that the P.S.C., (production sharing contract), for Galoc in the Phillipines is highly beneficial to 'first producing contractors' in relation to the rest of the world which simply equates to a substantially greater net value per barrel produced, (re NDO Day 35 Status Report - 05/10/04, page 18, bar graph visualisation). I will assume the price of oil, (poo), will be at or above US$41.73 by Q106 and therefore will use calculations based on net value per bop at AUD$15., AUD$18. & AUD$20. Please note that these calculations are based on net values per barrel, not gross (EBITDA) values.
There are currently 468.1m fully paid ordinary shares & for the purpose of these calculations, I will assume that all of the 144.1m listed options & 31.5m unlisted options will be exercised leaving a (post-reconstruction equivalent) capital structure (rounding) of 650m fpo by the end of Q106.
The speculative reward tables below are assuming NDO field ownership remains unchanged at 22.279% & assuming the above variables apply by the end of Q106.
**Assumption Reward Table #1.
Each horizontal development well flows at 5,000bls per day. 5,000bls X 2 = 10,000bls. 10,000bls X 0.22279 = 2,227.9 bopd net NDO.
i) 2,227.9bls X AUD$15. = AUD$33,418. per day X 91 = AUD$3,041,083.5 per quarter X 4 = AUD$12,164,334. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$97,314,672. AUD$97.3m divided by 650m fpo = 14.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$121,643,340. AUD$121.6m divided by 650m fpo = 18.7c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$145,972,000. AUD$145.9m divided by 650m fpo = 22.4c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$184,465,010. AUD$184.4m divided by 650m fpo = 28.0c per fpo valuation.
ii) 2227.9bls X AUD$18. = AUD$40,102.2 per day X 91 = AUD$3,649,300.2 per quarter X 4 = AUD$14,597,200. per annum.
a) p/e/r application of 8x = m/c of AUD$116,777,600. AUD$116.7m divided by 650m fpo = 17.9c per fpo valuation. b) p/e/r application of 10x = m/c of AUD$145,972,000. AUD$145.9m divided by 650m fpo = 22.4c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$175,166,400. AUD$175.1m divided by 650m fpo = 26.9c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$218,958,000. AUD$218.9m divided by 650m fpo = 33.6c per fpo valuation.
iii) 2,227.9bls X AUD$20. = AUD$44,558. per day X 91 = AUD$4,054,778. per quarter X 4 = AUD$16,219,112. per annum.
a) p/e/r application of 8x = m/c of AUD$129,752,890. AUD$129.7m divided by 650m fpo = 19.9c per fpo valuation. b) p/e/r application of 10x = m/c of AUD$162,191,120. AUD$162.1m divided by 650m fpo = 24.9c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$194,629,340. AUD$194.6m divided by 650m fpo = 29.9c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$243,286,680. AUD$243.2m divided by 650m fpo = 37.4c per fpo valuation.
**Assumption Reward Table #2.
Each horizontal development well flows at 7,500bls per day. 7,500bls X 2 = 15,000bls. 15,000bls X 0.22279 = 3,341.8 bopd net NDO.
i) 3,341.8bls X AUD$15. = AUD$50,127. per day X 91 = AUD$4,561,557. per quarter X 4 = AUD$18,246,228. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$145,969,820. AUD$145.9m divided by 650m fpo = 22.4cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$182,462,280. AUD$182.4m divided by 650m fpo = 28.0c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$218,954,730. AUD$218.9m divided by 650m fpo = 33.6c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$273,693,420. AUD$273.6m divided by 650m fpo = 42.0c per fpo valuation.
ii) 3,341.8bls X AUD$18. = AUD$60,152.4 per day X 91 = AUD$5,473,868.4 per quarter X 4 = AUD$21,895,473. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$175,163,780. AUD$175.1m divided by 650m fpo = 26.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$218,954,730. AUD$218.9m divided by 650m fpo = 33.6c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$262,745,670. AUD$262.7m divided by 650m fpo = 40.4c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$328,432,090. AUD$328.4m divided by 650m fpo = 50.5c per fpo valuation.
iii) 3,341.8bls X AUD$20. = AUD$66,836. per day X 91 = AUD$6,082,076. per quarter X 4 = AUD$24,328,304. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$194,626,430. AUD$194.6m divided by 650m fpo = 29.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$243,283,040. AUD$243.2m divided by 650m fpo = 37.4c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$291,939,640. AUD$291.9m divided by 650m fpo = 44.9c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$364,924,456. AUD$364.9m divided by 650m fpo = 56.1c per fpo valuation.
**Assumption Reward Table #3.
Each horizontal development well flows at 10,000bls per day. 10,000bls X 2 = 20,000bls. 20,000bls X 0.22279 = 4,455.8 bopd net NDO.
i) 4,455.8bls X AUD$15. = AUD$66,837. per day X 91 = AUD$6,082,167. per quarter X 4 = AUD$24,328,668. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$194,629,340. AUD$194.6m divided by 650m fpo = 29.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$243,186,680. AUD$243.1m divided by 650m fpo = 37.4c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$291,944,010. AUD$291.9m divided by 650m fpo = 44.9c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$364,930,020. AUD$364.9m divided by 650m fpo = 56.1c per fpo valuation.
ii) 4,455.8bls X AUD$18. = AUD$80,204. per day X 91 = AUD$7,298,600.4 per quarter X 4 = AUD$29,194,400. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$233,555,200. AUD$233.5m divided by 650m fpo = 35.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$291,944,400. AUD$291.9m divided by 650m fpo = 44.9c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$350,332,800. AUD$350.3m divided by 650m fpo = 53.8c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$437,916,000. AUD$437.9m divided by 650m fpo = 67.3c per fpo valuation.
iii) 4,455.8bls X AUD$20. = AUD$89,116. per day X 91 = AUD$8,109,556. per quarter X 4 = AUD$32,438,224. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$259,505,790. AUD$259.5m divided by 650m fpo = 39.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$324,382,240. AUD$324.3m divided by 650m fpo = 49.8c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$389,258,680. AUD$389.2m divided by 650m fpo = 59.8c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$486,573,360. AUD$486.5m divided by 650m fpo = 74.8c per fpo valuation.
**Assumption Reward Table #4.
Each horizontal development well flows at 12,500bls per day. 12,500bls X 2 = 25,000bls. 25,000bls X 0.22279 = 5,569.7 bopd net NDO.
i) 5,569.7bls X AUD$15. = AUD$83,545.5 per day X 91 = AUD$7,602,640.5 per quarter X 4 = AUD$30,410,562. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$243,284,490. AUD$243.2m divided by 650m fpo = 37.4cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$304,105,620. AUD$304.1m divided by 650m fpo = 46.7c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$364,926,740. AUD$364.9m divided by 650m fpo = 56.1c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$456,158,430. AUD$456.1m divided by 650m fpo = 70.1c per fpo valuation.
ii) 5,569.7bls X AUD$18. = AUD$100,254. per day X 91 = AUD$9,123,168.6 per quarter X 4 = AUD$36,492,674. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$291,941,390. AUD$291.9m divided by 650m fpo = 44.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$364,926,740. AUD$364.9m divided by 650m fpo = 56.1c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$437,912,080. AUD$437.9m divided by 650m fpo = 67.3c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$547,390,110. AUD$547.3m divided by 650m fpo = 84.2c per fpo valuation.
iii) 5,569.7bls X AUD$20. = AUD$111,394. per day X 91 = AUD$10,136,854. per quarter X 4 = AUD$40,547,416. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$324,379,320. AUD$324.3m divided by 650m fpo = 49.8cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$405,474,160. AUD$405.4m divided by 650m fpo = 62.3c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$486,568,990. AUD$486.5m divided by 650m fpo = 74.8c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$608,211,240. AUD$608.2m divided by 650m fpo = 93.5c per fpo valuation.
**Assumption Reward Table #5.
Each horizontal development well flows at 15,000bls per day. 15,000bls X 2 = 30,000bls. 30,000bls X 0.22279 = 6,683.7 bopd net NDO.
i) 6,683.7bls X AUD$15. = AUD$100,255.5 per day X 91 = AUD$9,123,250.5 per quarter X 4 = AUD$36,493,002. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$291,944,010. AUD$291.9m divided by 650m fpo = 44.9cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$364,930,020. AUD$364.9m divided by 650m fpo = 56.1c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$437,916,020. AUD$437.9m divided by 650m fpo = 67.3c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$547,395,030. AUD$547.3m divided by 650m fpo = 84.2c per fpo valuation.
ii) 6,683.7bls X AUD$18. = AUD$120,306.6 per day X 91 = AUD$10,947,900. per quarter X 4 = AUD$43,791,600. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$350,332,800. AUD$350.3m divided by 650m fpo = 53.8cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$437,916,000. AUD$437.9m divided by 650m fpo = 67.3c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$525,499,200. AUD$525.4m divided by 650m fpo = 80.8c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$656,874,000. AUD$656.8m divided by 650m fpo = 101.0c per fpo valuation.
iii) 6,683.7bls X AUD$20. = AUD$133,674. per day X 91 = AUD$12,164,334. per quarter X 4 = AUD$48,657,336. per annum.
a) Price earning ratio application of 8x = market capitilisation of AUD$389,258,680. AUD$389.2m divided by 650m fpo = 59.8cents per fpo valuation. b) p/e/r application of 10x = m/c of AUD$486,573,360. AUD$486.5m divided by 650m fpo = 74.8c per fpo valuation. c) p/e/r application of 12x = m/c of AUD$583,888,030. AUD$583.8m divided by 650m fpo = 89.8c per fpo valuation. d) p/e/r application of 15x = m/c of AUD$729,860,040. AUD$729.8m divided by 650m fpo = 112.2c per fpo valuation.
Obviously very bullish figures start to appear if one continues to expand upon a set structure of variables, none of the above is to say that any of this is going to occur & one can do this with just about any company in any sector, but it justifiably opens a doorway to solid speculation as to the variables concerning NDO within the immediate, medium & long term time-frames. It may take two & half years & seven wells to achieve the above production or they may actually achieve this within twelve to eighteen months with two wells, or, the funding may never actually be secured. The market may overshoot by twenty per cent or continually place a fifteen per cent discount to fundamental value ... the market will do what it does. The model is there as a basic speculative guage to determine risk/reward ratios in reflection of the individual's investment philosophies, risk tolerances & growth appetites. Any variable can be changed according to perspective and/or developments if & when they occur.
For example, 'assumption reward table #6' is based upon the variables; If NDO issued a further 170m shares @ 10c to raise AUD$17,000,000. to part fund the development for a further 10% farm-in interest in the field bringing a total (post-reconstruction equivalent) capital structure of 820m fpo by the end of Q106; the production from each horizontal development well was 9,000 bopd and; the net AUD$ per barrel was either AUD$14., AUD$18. and; the market decided p/e/r of either 7x, 9x or 11x.
Understand also that these reward tables are fully exclusive of & independant to any & all fundamental growth created through successful developments by the company relating to any one of their other primary or secondary assets.
**Assumption Reward Table #6.
Each horizontal development well flows at 9,000bls per day. 9,000bls X 2 = 18,000bls. 18,000bls X 0.32279 = 5,810.2 bopd net NDO.
i) 5,810.2bls X AUD$14. = AUD$81,342.8 per day X 91 = AUD$7,402,194.8 per quarter X 4 = AUD$29,608,779. per annum.
a) Price earning ratio application of 7x = market capitilisation of AUD$207,261,450. AUD$207.2m divided by 820m fpo = 25.2cents per fpo valuation. b) p/e/r application of 9x = m/c of AUD$266,479,010. AUD$266.4m divided by 820m fpo = 32.4c per fpo valuation. c) p/e/r application of 11x = m/c of AUD$325,696,560. AUD$325.6m divided by 820m fpo = 39.7c per fpo valuation.
ii) 5,810.2bls X AUD$18. = AUD$104,583.6 per day X 91 = AUD$9,517,107.6 per quarter X 4 = AUD$38,068,430. per annum.
a) Price earning ratio application of 7x = market capitilisation of AUD$266,479,010. AUD$266.4m divided by 820m fpo = 32.4cents per fpo valuation. b) p/e/r application of 9x = m/c of AUD$342,615,870. AUD$342.6m divided by 820m fpo = 41.7c per fpo valuation. c) p/e/r application of 11x = m/c of AUD$418,752,730. AUD$418.7m divided by 820m fpo = 51.0c per fpo valuation.
In conclusion, I personally believe that Nido Petroleum offers the risk tolerant investor/speculator enormous upside potential for the coming twelve to eighteen month period. As an investor, having a share-price performance orientated management remuneration structure gives me greater peace of mind & confidence in total management commitment, & the current top twenty; the institutions & players alike echo an understanding in all that's contained in the above. I believe that in relation to the economics of the current oil climate, if the Galoc field cannot gain funding now, it will remain a closed book until the price of oil is consistently > USD$60bbl. In the event that the Galoc field funding fails & providing the price of oil remains above USD$41.73, I have factored in an initial interim risk of 25% - 30% that should recover fairly quickly within the investment time-frame & still achieve moderate growth from today's market capitilisation because of the management & diversified asset-base of this company.
In the event that the Galoc field funding is successful, because of all the above variables, I believe the market will place a fair value market capitilisation equalling between 10c & 12c per fpo, with 14cent per fpo not unachieveble relative to time-frames & specifics of the agreement(s). I also believe that a share reconstruction & AIM listing will then be likely to occur by the end of Q305
The phrase 'blue-sky' is one that I have never applied in serious consideration, though if funding is successful, I would without hesitation describe NDO's future as having an open 'blue-sky' potential. This will start the ball rolling towards the consistent generation of serious capital within a relatively short time frame to then build upon & be able to focus on other existing assets in the region; ie - 'Service Contract 42 is located wholly within the Northwest Palawan Basin which is the most prolific hydrocarbon basin in the Philippines. It is a large permit (10,500 km2) lying adjacent to the giant Camago/Malampaya discovery (3-4 TCF gas) currently being developed by Shell/Texaco and the smaller oilfields (Matinloc, Nido) currently under cyclic production. It contains the undrilled Coron North prospect, a Miocene carbonate buildup with similarities to Camago/Malampaya, and estimated reserves of 100 mmbbl.' ...
But wait, there's more! ... : )
I now have to draw the line, (re *), the rest is simply now up to the individual to research further if all of the above has whet the curiousities ...
(20min delay)